Published on October 28th, 2020 |
by Zachary Shahan
October 28th, 2020 by Zachary Shahan
The theme of the past decade in the energy industry has been sharply dropping solar power, wind power, and battery prices. This has already led to enormous changes in the energy sector across the world. However, it’s sort of like the arrival of somewhat low-cost cellular flip-phones. Yes, their arrival changed communications like many had not thought possible, but that was only the tiny beginning of the transformation. Smartphones later came along, led by the first Apple iPhone, and you can hardly even consider 2020 communications technology to be in the same sector as flip-phones from the early 2000s.
So, yes, the energy sector — from electricity generation to energy to propel cars — has changed a great deal as solar power has gotten much cheaper. But we ain’t seen nothin’ yet.
A new report by RethinkX explores this topic much further. Here’s the one-line summary: “By 2030 electricity systems comprised entirely of solar, wind and batteries (SWB) can provide both the cheapest power available and two to three times more total energy than the existing grid in the continental United States, and most populated regions globally, bankrupting coal, gas and nuclear power companies and slashing consumer costs dramatically.”
Such cheap clean energy doesn’t just mean somewhat lower costs, though. It means disruption — to some extent or another. Why is it disruptive, not just cheaper? Because when you get down to basically “too cheap to meter,” business models shift around, new business potential appears, and the market shifts.
“A 100 percent SWB system will possess much more generation capacity than used on most days currently, which will produce an enormous amount of electricity at a marginal cost close to zero. The report authors show that this ‘Clean Energy Super Power‘ will enable new business models and industries, create trillions in new value, and could help repatriate energy-intensive manufacturing.”
Excess electricity at about $0 means a business or entire industry that relies on a lot of electricity will be attracted to the region like Pooh is attracted to honey. If this is the situation in many regions, electricity costs become a moot point for where to place a factory or other business, which can also shift the map around.
Of course, electric cars, electric buses, electric trucks, hydrogen storage facilities, and potentially even electric airplanes and robotaxis can soak up excess solar and wind electricity that’s going for $0.00001 — or even negative prices.
“Not only can it solve some of society’s most critical challenges but it will usher in hundreds of new business models and create industries that collectively transform the global economy,” Tony Seba, RethinkX co-founder and report co-author, noted. “When a system generates hyperabundant electricity at a marginal cost close to zero, the potential for new value creation is limitless. This isn’t a problem of overcapacity. This is a Super Power solution.”
But really — is more than 100% renewable energy possible? I’m glad you asked. As I wrote just before this piece, a couple weeks ago, the state of South Australia produced 100% or more of its electricity from solar power alone (not to mention wind) for one hour. And it’s just 2020.
“There is a misconception that too much solar and wind energy is a problem,” said Dr. Adam Dorr, report co-author. “That is looking at the equation through the old fossil fuel system lens, and doesn’t recognize the fundamentals of disruption. Sunlight and wind are free, and it is irrational to curtail the nearly costless clean energy we produce with them. As with other technology disruptions, it is a mistake to ask how the existing system will accommodate SWB. The grid as we know it will rapidly evolve into a larger, more flexible, diverse and capable system, just like the landline telephone network evolved into the Internet. Instead we must ask, ‘how can a new energy system based on SWB minimize costs and maximize benefits at every level of society and the economy?’”
Ah, I see now that they also brought the phone metaphor to the story. Cool.
— Mark Z. Jacobson (@mzjacobson) October 27, 2020
For this report, RethinkX dove into the electricity systems in California, Texas, and New England. “This report is the first in a series to examine the decisions required now in order to maximize the extraordinary benefits of a new energy system.”
Importantly, the authors note that as we plow forward into this new energy system, it’s not only about technology. Anyone working in this sector has to have the right mindset.
“It is no longer a matter of if the SWB disruption of energy will happen, it is only a matter of when and where,” James Arbib, co-founder of RethinkX, said. “Timing matters and the social, economic, political, and environmental stakes could not be higher. The actual outcomes depend on choices made today, and those who lead rather than follow or resist will benefit the most.”
Images courtesy RethinkX
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